Rockwell Automation Paves Way for $16 Billion Takeover

Industrial conglomerates such as Emerson, Honeywell and ABB are keeping their eyes peeled for industrial automation technology provider Rockwell Automation's next move toward signs that point to a takeover.

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The $12 billion company is proving that demand for assembly-line components could pave the way for the second-largest U.S. industrial acquisition on record, according to Bloomberg. Bloomberg analysts predict Rockwell's net income and revenue will increase for the fourth straight year in fiscal 2013 to $753 million and $6.4 billion, making the company a recurring subject of takeover speculation.

Bloomberg data also shows that Rockwell's free cash flow topped 92% of manufacturing equipment providers, and along with low debt, could make it of interest to private equity firms such as Nomura Holdings.

ABB may look to acquire Rockwell as a way to expand its U.S. presence. Shareholder New Amsterdam Partners (NAP) says ABB could ask for a takeover price of about $115 a share.

"The highest value for Rockwell Automation shareholders will be realized by Rockwell Automation remaining an independent company and executing our growth and performance strategy," wrote John Bernaden, a spokesman for Rockwell, in an e-mail.

Rockwell's return on equity rate was 36% last quarter, compared with an average of 13% from other measurement instrument competitors. Michelle Clayman, chief investment officer for NAP, says the combination of a high rate of return and Rockwell's growth prospects could be attractive to buyers. Since at least 2008, Rockwell has also been viewed as a potential acquisition target for strategic buyers because of declining stock prices.

Read the full article from Bloomberg.